Mass Merger - the Case of Aon Singapore

Significant diversity throughout its employee base of over 17,000 brings imminent challenges of cultural differences and linguistics (Alfa Laval 2017d). They have undertaken multiple acquisitions which materially heighten the amount of diversity to be handled by the HR department. Typically, the impact of a cross-border acquisition is negative with added communication difficulties, logistic problems and shared assumptions are found much harder to configure (Piekkari 2005). For instance, Alfa Laval acquired Norwegian company Frank Mohn AS in 2017, who withheld powerful market share in the manufacturing of pumping systems and shipping (Alfa Laval Group, 2017a). Piekkari (2005) discusses that combining companies often demotivates existing employees as they feel although relevant management are not transparent enough in the acquisition process and sense a surrender to a higher power rather than a positive marriage of equals. This then results in a decrease in important KPIs such as productivity and job satisfaction, which are often attached to increases in staff

Culture clashes in businesses can differ in many ways, and it is not understood why some cultures make it through a merger, while others appear not to make it through a merger at all. The merger within different businesses can be a major situation for everyone to go through, and when dealing with two of America’s biggest companies, the difficulty of the situation can only increase. Once businesses decide to merge, quite often it seems as though one company gains all the benefits and the other loses out. However, this paper will illustrate that is not the situation when it comes to Bank of America and MBNA.

Following this argument, Hall builds the differentiation between High Context and Low Context cultures using some characteristics which could be divided in:

2. Given the diversity of cultures embedded in the merged organization, what should the management team do to facilitate a working culture in the new organization?

A culture of any region provides a complete framework to its inhabitants to how to organize themselves, their actions and thoughts with respect to their environment. Thus culture is not innate; instead it is learned by the people as they continue to live in that particular region. This culture drives their thinking, actions and basically all kinds of interaction with their surroundings. Thus, it is different for different areas and people from these areas learn different ways to interact by each other(Neuliep, 2015).Moreover, people from different cultures differ from each other because of their context in which they move about. This context plays an important role in providing meaning to their interaction. There are some things that cannot be understood by verbal words alone; they have to be justified by the context in which they exist. This has been argued by Edward Hall, according to whom, “context carries varying proportions of the meaning” (Gamsrieglerm, 2005). Because of these differences in interaction due to differences in the context in which these people exist, culture has been divided into two sub-categories. One is high-context culture and the other is low-context culture. These two terms are used to refer to the differences in culture between different societies because of the difference in context, and have been suggested by a well-known U.S. anthropologist Edward T. Hall (Hofstede, 2011).

Some businesses in America transfer into bi-cultured after starting out as monoculture. This typically happens when one company buys out the other or they join each other and sub-merge. Every now and then this happens globally. Companies face changes when a merger takes place such as how the business will operate, wages, and or if there will be interference from the government. Once the merger has begun the rules are changed to better serve the company whether people are with it or against it. Company success stories are sent over to a list which is created called the Globe Project list. This list gives pointers and advice for globalized managers to practice based on several key items and characteristics required during a successful merger. Daft states, “Some of the characteristics are assertiveness, performance, and human orientation” (Daft, 2013 ).

Hall describes context as the information that surrounds an event. In high context societies, the situation, the external environment and non-verbal cues are crucial in the communication process. However, this approach fits much better with a generic concept of culture, in the sense of a broad cultural community such as Arabs, Latins or Chinese, than with the constrained boundaries of a nation state, where individual and organizational diversity allows for a pluralistic coexistence of both low and high context.

(Barney and Hesterly 2010) The need for a mission statement is based on the presumption that a well-designed mission statement is linked to better organizational performance because it provides a framework for decision making, influence over employee motivation, and a mechanism for signaling organizational legitimacy to stakeholders. (Kirk and Beth 2010) A study in the Journal of Management and Development found that organizational performance was positively affected by the degree of non-managerial employees' involvement in the process of mission statement development and that it negatively affected performance when financial goals were included in the mission statement. (Alavi and Karami 2009)

Another example of an unsuccessful merger involves internet giant America Online (AOL) and media conglomerate Time Warner. The merger deal occurred in 2000 and is still known as the largest and worst merger deal in American business history at $165 billion. The deal was presented as an equal merger but AOL, holding more valuable stock, essentially acquired Time Warner which resulted in AOL owning 55% of the new company. The proposed vision of the merger was that combining the businesses would benefit from the synergies in technological infrastructure, consumer reach, and operations. The merger was to give Time Warner the ability to digitize its content and reach out to a new online audience. As a trade-off, AOL wanted to access Time Warner’s cable systems, giving rise to innovative broadband capability and additional content to provide to it 27 million subscribers. By 2002, the companies experienced a net loss of nearly $99 billion. By 2010, the companies cut their losses and separated indefinitely. Reasons for the unsuccessful merger can be traced back to the inability to correctly evaluate organizational compatibility as well as the poor execution of growth strategies. Because of economic downturns during the period of merging, both companies experienced a decrease its advertisers and subscribers. This only escalated through a clash in business cultures as executives and employees resisted implementing the new growth strategies put in place. There was also a negative

The leadership team did not carefully evaluate their method of communication with stakeholders and created personal barriers with regard to the level of trust. This barrier created a distortion in the communication between the leadership team, Technologies Workers Union, and the employees. Kinicki and Kreitner (2003) stated, “communication is more likely to be distorted when people do not trust each other,” (p. 525). The leadership team now has an opportunity to develop a more effective communication plan that will reduce these barriers by effectively communicating with all the stakeholders and maintaining integrity through honesty and respect. Kinicki and Kreitner (2003) define distortion as, “an important problem in organizations because modifications to message can cause misdirectives to be transmitted, non-directives to be issued, incorrect information to be passed on, and a variety of other problems related to both quantity and quality of information,’” (p.

2010). This is one of the reasons why its become increasingly concentrated over the past two decades ( Kumar, 2012). During the period between 1980’s and 1990’s this industry saw a considerable rise in mergers and acquisitions, with the growth alone, of the industry, rising 959 percent in stock index (Kaplan, 2000). Coyle (2000) tells us that a Merger and Acquisition (M & A) takes place when two or more companies combine all or part of their operations. But there are some differences between them; Paul and Richter (2009, p.35) defines a merger as “ a full joining together of two previously separated corporations. A true merger in the legal sense occurs when both businesses fold their assets and liabilities into a newly created third entity resulting in a new corporation” the authors also define an acquisition as “a direct purchase or through a merger that involves the exchange of assets”. Most of the M & As created in this industry is through horizontal mergers (Neirinckx, 2000) with this being shown in the merger between Glaxo Wellcome and Smithkilne Beecham, to create GlaxoSmithKline (Kumar, 2012). This merger took place in the year 2000 (GSK.com, 2014) with the deal costing $76 billion. After the merger occurred they held 7.3 percent of the global pharmaceutical market, with a combined value of £108billion ($177billion) (money.cnn.com, 2000) . The terms of the deal was described as a “merger of equals”. Glaxo Wellcome will have control of 58.75

Aon is New Zealand’s largest insurance broker with network of more than 730 staff in 76 offices serving 195,000 clients. We are the major force in New Zealand for insurance broking, risk management, employee benefits and claims management. We continually strive to improve and extend our services to corporate business, small and medium businesses, groups and individuals.

Mission is still a relatively neglected area of management, and there is no clear agreement on what it encompasses. The Ashridge Strategic Management Centre conducted a 2-year research project designed to fill this gap. The research found that if mission is more clearly defined it can be managed better, and developed a model of mission that includes four elements -purpose, strategy, behaviour standards and values. The project identified companies where, in addition to strong links between these elements, employees also showedan emotional

Furthermore, Hall builds a differentiation between High Context and Low Context cultures using characteristics which could be divided in:

What are some of the salient characteristics and differences between high and low context cultures?